Legislature(2009 - 2010)BARNES 124

02/03/2009 10:00 AM House FISHERIES

Download Mp3. <- Right click and save file as

Audio Topic
10:03:07 AM Start
10:04:01 AM HB20
10:40:46 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 20(FSH) Out of Committee
HB  20-FISHERIES LOANS FOR ENERGY EFFICIENCY                                                                                  
CHAIR EDGMON announced  that the only order of  business would be                                                               
HOUSE BILL NO.  20, "An Act relating to  commercial fishing loans                                                               
for energy efficiency upgrades."                                                                                                
10:05:02 AM                                                                                                                   
REPRESENTATIVE MILLETT  informed the committee that  she may have                                                               
a conflict with  HB 20 because as a commercial  fisherman she may                                                               
take advantage of the proposed program.                                                                                         
10:06:48 AM                                                                                                                   
[Chair Edgmon passed the gavel to Representative Keller.]                                                                       
10:06:56 AM                                                                                                                   
REPRESENTATIVE  JOHNSON  moved  to  adopt CSHB  20,  Version  26-                                                               
LS0124\S, Kane,  1/29/09, ("Version S") as  the working document.                                                               
There being no objection, Version S was before the committee.                                                                   
10:07:45 AM                                                                                                                   
CHAIR EDGMON,  speaking as the  sponsor, said the  legislation is                                                               
an attempt  to provide  energy relief  to the  fishing community.                                                               
The  legislation expands  the  existing  commercial fishing  loan                                                               
program  so  that  a  larger   number  of  Alaska  fishermen  can                                                               
participate.   He  said HB  20 renames  the "'engine'  efficiency                                                               
loan"  the  "'energy' efficiency  loan"  and  explained that  the                                                               
purpose  for  renaming it  is  to  allow qualified  fishermen  to                                                               
purchase more efficient  engines as well as to  make other energy                                                               
efficiency  improvements to  their vessels  or gear.   Version  S                                                               
provides  a technical  fix  that removes  a  prohibition from  AS                                                               
16.10.310(a)(1)(B)   that  would   allow  AS   16.10.310(a)(1)(A)                                                               
fishermen  to  participate  in this  energy  efficiency  program.                                                               
Version S also raises the  total allowable balance for this newly                                                               
created  energy   efficiency  loan   program  from   $300,000  to                                                               
$400,000.  The  higher amount is warranted because  [Alaska] is a                                                               
higher cost environment, he opined.                                                                                             
10:10:49 AM                                                                                                                   
CHAIR  EDGMON  explained  that the  existing  Commercial  Fishing                                                               
Revolving  Loan Fund  has many  components.   He  said Version  S                                                               
would allow  fishermen participating  in the  loan fund  under AS                                                               
16.10.310(a)(1)(A),  which provides  a maximum  loan of  $300,000                                                               
for the purchase  of limited entry permits or  existing vessel or                                                               
gear  upgrades,  to  also participate  in  AS  16.10.310(a)(1)(B)                                                               
where  the  engine  efficiency loan  program  currently  resides.                                                               
Version S  would also rename  that program the  energy efficiency                                                               
program.    The aforementioned  will  allow  a larger  number  of                                                               
fishermen to  take advantage of  the loan program in  today's low                                                               
interest environment.  He said there  is a fiscal note that would                                                               
add one more  staff position to address the  expected increase in                                                               
demand for the loan program.   This would not involve any general                                                               
fund  money, he  continued, because  it involves  program receipt                                                               
authority which is  money that is derived from  the portfolio and                                                               
its earnings.                                                                                                                   
10:13:02 AM                                                                                                                   
REPRESENTATIVE KAWASAKI inquired as  to whether energy efficiency                                                               
is defined in the bill or in regulation.                                                                                        
CHAIR EDGMON  replied it would  likely be defined  in regulation,                                                               
but deferred the question to Mr. Winegar.                                                                                       
10:13:27 AM                                                                                                                   
REPRESENTATIVE   MUNOZ  understood   that   currently  under   AS                                                               
16.10.310(a)(1)(B),  fishermen can  apply  for  $100,000.   Would                                                               
these  fishermen  then  be  able   to  apply  for  an  additional                                                               
$100,000, or is  the purpose to expand the borrowing  power of AS                                                               
16.10.310(a)(1)(A) applicants only, she asked.                                                                                  
CHAIR   EDGMON  said   the   bill's  intent   is   to  allow   AS                                                               
16.10.310(a)(1)(A) participants who would not  qualify for the AS                                                               
16.10.310(a)(1)(B) loan  program to  be able  to qualify  for the                                                               
energy efficiency loan program.   Therefore, it would broaden the                                                               
energy efficiency program so that  both AS 16.10.310(a)(1)(A) and                                                               
AS 16.10.310(a)(1)(B)  participants could qualify.   It would not                                                               
do   anything    else;   the   existing   requirements    of   AS                                                               
16.10.310(a)(1)(A)  and 16.10.310(a)(1)(B)  would  apply for  the                                                               
other loan programs that are in place.                                                                                          
10:14:42 AM                                                                                                                   
GREG WINEGAR,  Director, Division  of Investments,  Department of                                                               
Commerce,  Community,  &  Economic Development,  noted  that  the                                                               
Division  of  Investments   administers  the  Commercial  Fishing                                                               
Revolving Loan  Fund.  He  explained that the primary  purpose of                                                               
this fund is  to promote a predominantly resident  fishery and it                                                               
does  this  by providing  low  interest  loans to  harvesters  in                                                               
Alaska.   The  program  began in  the early  1970s  and has  been                                                               
successful   from  both   a  policy   standpoint  and   a  fiscal                                                               
standpoint.   The fund is  totally self-sufficient and  spins off                                                               
more earnings  than are  necessary to run  the program,  so there                                                               
would be  no general fund  impact as a  result.  The  bill allows                                                               
people   who  qualify   either  for   AS  16.10.310(a)(1)(A)   or                                                               
16.10.310(a)(1)(B)  to  make  energy efficiency  improvements  to                                                               
their  vessels.    This  has  a two-fold  advantage:    it  helps                                                               
Alaska's  fishermen be  more competitive  and  profitable and  it                                                               
helps  the   environment  by  lessening  the   industry's  carbon                                                               
footprint.   He  said  the  fiscal note  is  due  to an  expected                                                               
increase  in  loan  demand; the  division  estimates  about  $4.2                                                               
million  the first  year.   The fund  has plenty  of reserves  to                                                               
handle  the  increased demand.    The  division  put in  for  one                                                               
position  in  case the  increased  demand  is as  substantial  as                                                               
expected  and   the  position  would   only  be  filled   if  the                                                               
expectation does materialize.  The  position would have no impact                                                               
on  the general  fund because  all of  the loans  as well  as the                                                               
operating expenses  are paid out of  the loan fund.   He said the                                                               
division supports  HB 20 as it  does a number of  positive things                                                               
for the fishing industry.                                                                                                       
10:17:06 AM                                                                                                                   
MR. WINEGAR, in response to  Representative Munoz, explained that                                                               
the  limit stays  the  same,  but what  the  bill  does is  allow                                                               
fishermen to come  in under either of  these two [subparagraphs].                                                               
So,   a   fisherman  could   get   up   to  $300,000   under   AS                                                               
16.10.310(a)(1)(A)  and  still  be  eligible  to  come  in  under                                                               
16.10.310(a)(1)(B) and  borrow another $100,000.   Right  now the                                                               
limit is a total of $300,000 between the two sections.                                                                          
10:17:44 AM                                                                                                                   
REPRESENTATIVE  MUNOZ  reiterated  her  question  as  to  whether                                                               
fishermen  borrowing $100,000  under AS  16.10.310(a)(1)(B) could                                                               
then borrow an additional $100,000.                                                                                             
MR. WINEGAR  replied that the  limit for  [AS 16.10.310(a)(1)(B)]                                                               
stays at  $100,000.  The  bill enables a  fisherman to get  up to                                                               
$100,000 under AS  16.10.310(a)(1)(B), as well as  up to $300,000                                                               
under AS 16.10.310(a)(1)(A).   So the limits are not  going up on                                                               
each section,  it is  the total  limit of  the two  sections that                                                               
goes up to $400,000.                                                                                                            
10:18:27 AM                                                                                                                   
REPRESENTATIVE KAWASAKI  reiterated his question  regarding where                                                               
energy efficiency will be defined.                                                                                              
MR. WINEGAR  confirmed that  it would  be defined  by regulation.                                                               
If the bill  is passed, the division would  initiate a regulation                                                               
process to further  define what types of things  are being talked                                                               
about.  He said the division  went through a similar process with                                                               
the product quality improvement loans.                                                                                          
10:18:54 AM                                                                                                                   
REPRESENTATIVE  JOHNSON surmised  this  would be  a secured  loan                                                               
that would involve collateral.                                                                                                  
MR.   WINEGAR   responded  correct,   all   of   the  loans   are                                                               
collateralized.   In further response to  Representative Johnson,                                                               
Mr.  Winegar  offered his  understanding  of  the intent  of  the                                                               
retroactive clause.   The division  initiated the program  for AS                                                               
16.10.310(a)(1)(B)  in fall  [2008]  because it  already had  the                                                               
statutory  authority to  make this  type of  loan.   The division                                                               
went   through  a   regulation   process  that   enabled  it   to                                                               
dramatically  lower  the  interest  rate  to  make  this  a  real                                                               
incentive program.   A number of folks found out  about this last                                                               
fall and started working on  the process, not realizing that this                                                               
did not apply  to AS 16.10.310(a)(1)(A) borrowers.   The division                                                               
does  not  have  the  statutory  authority  to  do  that  for  AS                                                               
16.10.310(a)(1)(A) and  that is the purpose  of this legislation.                                                               
The idea is to let these  people also participate in the program.                                                               
Mr.  Winegar related  his belief  that it  is a  small number  of                                                               
folks  and  it  would  mostly  be  for  upgrading  to  more  fuel                                                               
efficient  engines.   He  allowed  that  items not  involving  an                                                               
engine  may  need to  be  handled  from  a policy  standpoint  or                                                               
decisions deferred until the regulations are in place.                                                                          
10:21:09 AM                                                                                                                   
REPRESENTATIVE JOHNSON asked whether  it would be advantageous to                                                               
not  include the  retroactivity as  he has  a problem  with going                                                               
MR. WINEGAR said he does not  have any issue with that, but would                                                               
defer  to  the  sponsor.    He noted  that  there  is  already  a                                                               
regulation  in   place  that  allows  the   division  to  provide                                                               
reimbursement for items purchased with cash within the year.                                                                    
10:22:18 AM                                                                                                                   
CHAIR  EDGMON  opined  that  it's   worth  at  least  having  the                                                               
discussion  at the  committee level  regarding  factoring in  the                                                               
small number  of folks who  have already repowered  their fishing                                                               
vessel.   Furthermore,  the reduction  of a  few interest  points                                                               
over  a  15-year lifespan  could  really  have  an impact  on  an                                                               
Alaskan  family.   He then  said that  he is  open to  discussing                                                               
whether to maintain the retroactivity clause.                                                                                   
10:23:45 AM                                                                                                                   
REPRESENTATIVE JOHNSON  clarified that  his concern  is regarding                                                               
writing regulations  based on things that  have already happened;                                                               
regulations should  be written based  upon the best  policies for                                                               
the  state in  the future.   He  said he  didn't want  to exclude                                                               
anyone and  would prefer forward-looking regulations  rather than                                                               
backward-looking regulations.                                                                                                   
10:25:12 AM                                                                                                                   
REPRESENTATIVE  KAWASAKI asked  if  an  immediate effective  date                                                               
would provide  folks knowledge of  the program and allow  them to                                                               
participate in the program this next fishing year.                                                                              
MR. WINEGAR relayed that the program  can be put together as soon                                                               
as the legislation passes.                                                                                                      
CHAIR EDGMON  opined that the  fact that there's no  knowledge as                                                               
to  when the  legislation will  pass  and be  in effect  provides                                                               
additional justification for the retroactivity.                                                                                 
MR. WINEGAR  highlighted that the  interest rates are at  an all-                                                               
time low, and thus this is  a great opportunity to take advantage                                                               
of that interest rate environment.                                                                                              
10:27:27 AM                                                                                                                   
REPRESENTATIVE  KAWASAKI recalled  testimony that  the commercial                                                               
fishing loan  fund is  only available to  locals.   Therefore, he                                                               
presumed that  there must  be a  residency requirement  such that                                                               
the individual  has to  live in  Alaska for  a certain  number of                                                               
years.  He asked if the boat has to be housed in Alaska.                                                                        
MR.  WINEGAR  answered  that  the  statute  includes  a  two-year                                                               
residency  requirement,  but  there is  no  specific  requirement                                                               
regarding the location of the vessel.                                                                                           
10:28:16 AM                                                                                                                   
REPRESENTATIVE KAWASAKI related his  understanding that the folks                                                               
who qualify  for this loan are  folks who don't qualify  for bank                                                               
MR.    WINEGAR   responded    that    is    correct   under    AS                                                               
16.10.310(a)(1)(B),   which  targets   those  who   can't  obtain                                                               
financing  from   banks  but  that's   not  the  case   under  AS                                                               
16.10.310(a)(1)(A).    In   further  response  to  Representative                                                               
Kawasaki,  Mr. Winegar  acknowledged  that those  loans under  AS                                                               
16.10.310(a)(1)(B) are  a bit  riskier portfolio  and have  a bit                                                               
higher delinquency  rate.   However, they  do repay  their loans.                                                               
The rates  are low  and the  fund has  performed very  well, even                                                               
with the AS 16.10.310(a)(1)(B) criteria.                                                                                        
10:29:18 AM                                                                                                                   
REPRESENTATIVE KELLER inquired as  to what programs are available                                                               
to commercial sport fishing guides.                                                                                             
MR.  WINEGAR  informed the  committee  that  there are  two  loan                                                               
programs that the  division makes to charter  operations, both of                                                               
which are  small business-related  programs.   The loans  are the                                                               
Rural  Development   Initiative  Fund  and  the   Small  Business                                                               
Economic  Development  Fund  from  which the  division  has  made                                                               
several loans to  charter operators.  Mr. Winegar  said he didn't                                                               
see why an  engine upgrade for [commercial  sport fishing guides]                                                               
wouldn't  qualify  as  well under  the  aforementioned  two  loan                                                               
programs.   In  further  response to  Representative Keller,  Mr.                                                               
Winegar  specified that  the  terms and  interest  rates for  the                                                               
commercial  sport  fishing  loans   are  different.    The  Rural                                                               
Development Initiative  Fund has a  statutory floor of  6 percent                                                               
and  the Small  Business  Economic Development  Fund has  federal                                                               
funds  and has  a  floor  of 4  percent.    Under the  commercial                                                               
fishing loan program, the rate  is prime minus two, which amounts                                                               
to 2 percent.                                                                                                                   
10:32:11 AM                                                                                                                   
MARK  VINSEL,  Executive  Director, United  Fishermen  of  Alaska                                                               
(UFA), related  support for HB 20.   He then opined  that without                                                               
the  success of  marketing and  differentiating Alaska's  fish as                                                               
wild and sustainable,  it would've been a very  tragic season for                                                               
the  fishing industry.   He  told  the committee  that this  past                                                               
season, a  petition was circulated among  commercial fishermen in                                                               
about  15  communities,  and  within a  few  weeks  about  18,000                                                               
signatures  were  obtained.    With  regard  to  the  fuel  price                                                               
situation, Mr. Vinsel opined that  carbon creation or consumption                                                               
needs to be reduced no matter  the price of fuel.  Therefore, the                                                               
fleets need  to be modernized  and this program provides  a great                                                               
way to  do so.   The UFA  appreciates the administration  and the                                                               
division  moving  forward  with  this program  and  other  energy                                                               
saving improvements both of which HB 20 would accomplish.                                                                       
10:35:01 AM                                                                                                                   
CHAIR  EDGMON requested  comment on  the retroactivity  clause of                                                               
the  legislation  and asked  whether  there's  a good  reason  to                                                               
include the retroactivity clause.                                                                                               
MR.  VINSEL recalled  that UFA  discussed [the  engine efficiency                                                               
loan  program]  at its  late  September  board meeting,  but  the                                                               
[retroactivity issue]  didn't come up.   Although he acknowledged                                                               
the  existing   ability  for  fishermen  to   be  reimbursed  for                                                               
purchases within  a year, he  shared Mr. Winegar's  concerns that                                                               
[reimbursing  individuals]  would  still  need  to  be  addressed                                                               
regardless of  whether the legislation  is passed promptly.   One                                                               
of the  reasons [UFA]  supported expanding  the program  to other                                                               
energy improvements  is because many fishermen  have already paid                                                               
for modernization, he said.   Those fishermen benefited very well                                                               
and the  retroactivity doesn't  leave out  those leading  the way                                                               
[in seeking energy efficiencies].                                                                                               
10:37:15 AM                                                                                                                   
JASON  BRUNE, Executive  Director,  Resource Development  Council                                                               
(RDC), began  by relaying  support for  HB 20.   He  reminded the                                                               
committee that  RDC is a statewide,  nonprofit, membership funded                                                               
organization founded  in 1975.   The RDC membership  is comprised                                                               
of individuals and  companies from Alaska's oil  and gas, mining,                                                               
timber,  tourism,  and fisheries  industries  as  well as  Alaska                                                               
Native  corporations,  local  communities, organized  labor,  and                                                               
industry  support firms.    The purpose  of RDC  is  to link  the                                                               
diverse  interests together  to  encourage  a strong  diversified                                                               
private sector  in Alaska  and expand  the state's  economic base                                                               
through  the  responsible  development  of  the  state's  natural                                                               
resources.  Throughout the past  several years Alaskans have been                                                               
struggling with  high energy  costs.  He  relayed that  fuel cost                                                               
and usage have  escalated since fishermen have to  go further out                                                               
for  catch  due  to  impacts from  endangered  species  listings,                                                               
critical habitat  designations, marine protected areas,  and fish                                                               
movement.  Therefore, opportunities  to improve energy efficiency                                                               
through state  loans are important  for the fishermen as  well as                                                               
the environment.   Increased efficiency,  he opined,  will likely                                                               
lower  costs,   and  decreased  carbon  emissions.     Mr.  Brune                                                               
concluded by encouraging  the committee to vote in  favor of this                                                               
10:39:01 AM                                                                                                                   
REPRESENTATIVE  KELLER, upon  determining no  one else  wished to                                                               
testify, closed public testimony.                                                                                               
10:39:40 AM                                                                                                                   
REPRESENTATIVE  JOHNSON  moved to  report  CSHB  20, Version  26-                                                               
LS0124\S,  Kane,  1/29/09,  out   of  committee  with  individual                                                               
recommendations and  the accompanying fiscal notes.   There being                                                               
no objection, CSHB 20(FSH) was  reported out of the House Special                                                               
Committee on Fisheries.                                                                                                         
[Representative Keller returned the gavel to Chair Edgmon.]                                                                     

Document Name Date/Time Subjects
CommFishLoanOutline--HB20.pdf.pdf HFSH 2/3/2009 10:00:00 AM
HB 20
AkConsvAllianceHB20Support.PDF HFSH 2/3/2009 10:00:00 AM
HB 20
HB20--SponsStAndSectional.pdf HFSH 2/3/2009 10:00:00 AM
HB 20
HB20--1.29.09WorkDraft.PDF HFSH 2/3/2009 10:00:00 AM
HB 20
PSPA Support for HB20.pdf HFSH 2/3/2009 10:00:00 AM
HB 20
SeaGrantFuelSurvey--HB20.pdf.PDF HFSH 2/3/2009 10:00:00 AM
HB 20
HB20HarringtonSupportMssg.PDF HFSH 2/3/2009 10:00:00 AM
HB 20
HB20SEAKFSHAllianceSupport.PDF HFSH 2/3/2009 10:00:00 AM
HB 20
HB20UFASupport.PDF HFSH 2/3/2009 10:00:00 AM
HB 20
HB 20-CED-Investments 2 2 09FiscalNote.pdf HFSH 2/3/2009 10:00:00 AM
HB 20
HB20-FJohnsonSupport.pdf HFSH 2/3/2009 10:00:00 AM
HB 20
HB20-RDC Support.pdf HFSH 2/3/2009 10:00:00 AM
HB 20